Test Prep Firm Seeks to Raise Funds

Career Launcher India Ltd., which prepares students for competitive examinations, is considering selling a stake in the company to an overseas firm or selling shares to the public to raise funds to expand into new business segments. The company is in initial discussions with global education companies and hasn’t decided on how much stake it wants to sell, Managing Director Nikhil Mahajan said. The company has hired an investment bank for advising it on the stake sale; Mr.Mahajan declined to disclose its name.

Educational institutions, especially tutorial and coaching businesses, are in high demand among investors. UK-based Pearson Plc increased its stake in online tutoring firm TutorVistato to 76% earlier this year. Analysts expect more such niche acquisitions. In 2010, private equity companies invested a total of $54 million in local education services providers.

With the education and publishing business shrinking in western economies, companies such as Pearson, Reed Elsevier and McGraw-Hill Co. might invest more in emerging markets, wrote analysts Ankur Rudra and Subhashini Gurumurthy of Ambit Capital Pvt. Ltd in a research note. For Career Launcher, raising money through an initial public offering is another option, and the company expects to finalize this in the next two quarters, Mr. Mahajan said. The company had sales of 1.50 billion rupees ($33.9 million) for the year ended March 31.